Tuesday, June 9, 2015

Dividend Analysis of Top 4 Oil Companies

I wanted to take a closer look at the top 4 oil producers in the United States based on barrel production. The stocks include the following:
  • Exxon Mobil
  • Chevron Corporation
  • ConocoPhilips
  • Occidental Petroleum Corporation

Exxon Mobil (XOM)

Looking at the past 5 years, there was a small dip in the EPS, but yearly dividends still increased. The Payout Ratio was between 25% and 35% which for most dividend investors is fairly low. Not really much to note here as XOM is a dividend champion having raised its dividend for the past 33 consecutive years.

Chevron Corporation (CVX)

Here we see a similar story to XOM where the EPS drops in 2013 and the payout ratio increases but still remains in the acceptable range for dividend investors. Dividends are still moving nicely higher each year. This is also a dividend champion based on CVX raising dividends each year for the past 27 years. Recently Chevron has been selling off some of its assets to protect its capital amid lower oil prices. I think this is a good move and even considering the EPS moving forward for CVX is going to be lower, I think they will still maintain their dividend growth. 

ConocoPhilips (COP) 

Once again, we see positive dividend growth but actually an increase in EPS during 2013. Payout Ratio is climbing but not nearing anything considered to be high (>75%). COP is considered a contender with only 14 years of dividend growth, which is still impressive. Estimates show the EPS for 2015 significantly lower around $0.43 according to NASDAQ.

Occidental Petroleum (OXY)

 Occidental saw a major change in EPS during 2014 and it appears it will only slightly improve for 2015 according to NASDAQ. The future looks better in terms of EPS, but they are paying out a high multiple of earnings to dividends currently which will steer many dividend investors away. OXY does have 12 years of dividend increases so I would be surprised to see them change now.

Disclaimer: Long CVX.

1. Oil Producing Sources: http://www.petrostrategies.org/Links/biggest_us_oil_and_gas_companies.htm
2. Dividend CCC List Data: http://dailydividendalert.com/david-fishs-dividend-champions-contenders-and-challengers/

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